■Essential Question: –What caused the Great Depression & how did the federal government respond?

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Presentation on theme: "■Essential Question: –What caused the Great Depression & how did the federal government respond?"— Presentation transcript:

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■Essential Question: –What caused the Great Depression & how did the federal government respond?

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The Great Depression

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■The Depression of the 1930s came as a shock to Americans: –The consumer revolution led to confidence that 1920s economic prosperity would continue –When the stock market crashed in 1929, businesses closed & millions were unemployed –Americans began to look to the gov’t for unprecedented support

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The Great Crash ■Prelude to the stock market crash –In 1927, the economy had a recession but gov’t & business leaders ignored warning signs –The Federal Reserve lowering interest rates for loans would stimulate the economy, but this easy credit led speculators to buy stock on-the-margin

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This downward spiral continued for 4 years; By 1932 unemployment was at 25% Unemployment,

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The Great Crash ■Reasons for the depression: –U.S. factories overproduced consumer durable goods –The post-war conditions in Europe decreased foreign trade consumer purchase power –Unequal distribution of wealth, high consumer debt, stock market over speculation led to an overall decrease in consumer purchase power Consumers already owned durable goods & were not buying more

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In 1929, the total market debt of the USA was 210% of the value of GDP By 1934, U.S. debt rose to 265% of GDP In 2005, the value of U.S. debt was 303% of GDP

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Effects of the Great Depression ■The Depression hit all classes: –Many families lost their homes or farms & were forced to live in “Hoovervilles” –The U.S. saw unprecedented poverty & suicide rates; fathers abandoned their families; lawlessness ensued –The U.S. gov’t offered relief checks to the unemployed

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Hoover and Voluntarism ■Hoover’s initial response was to reassure Americans that prosperity would return ■Hoover rejected bold gov’t action & called for volunteerism among charities, local gov’t, & business Reconstruction Finance Corps ■As the depression worsened, Hoover called for gov’t projects like the Reconstruction Finance Corps (RFC) which loaned money to failing businesses “Rugged individualism”

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The Hoover administration initiated job-creation programs, like building the Hoover Dam

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Hoover and Voluntarism ■In 1932, President Hoover suffered two final blows: Bonus Army –When 22,000 war veterans marched to the capital to demand their WW1 bonus checks early, Hoover ordered this Bonus Army to be forcibly removed –The steady rise of bank failures led to a complete collapse of the U.S. banking system

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Bonus Army Douglas MacArthur Dwight Eisenhower

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Bank Failures,

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Fighting the Depression ■The inability of Republicans to resolve the economic depression opened the door for a Democratic takeover in politics ■Once in power, Democrats succeeded in relieving some suffering, restored hope, & created an unprecedented level of gov’t intervention in the process